I am often asked whether what we are doing in the world of AML – namely due diligence, record-keeping, staff training and reporting of suspicions – is actually having a positive impact. I’ve mulled on this before, and no doubt will again, but occasionally someone tries something completely out of left field (as they say in some sport or another – please don’t write in) to tackle the problem. And on the evening of 8 November 2016, that someone was Narendra Modi, the PM of India. Seemingly to the surprise of everyone else in the world, he announced that the largest denomination banknotes circulating in his country – worth 500 and 1,000 rupees [now about £5.80 and £11.60 respectively, as the rupee has plummeted in value] – would cease to be legal tender within four hours, and after that could be paid into banks and post offices only up until 30 December 2016. The plan is to foil corruption and other crimes, by rendering worthless stashes of undeclared income and other criminal cash, before issuing newly-designed 500 and 2,000 rupee notes sometime soon (this is taking longer than anticipated, even with mints working at full stretch).

But the impact has been huge; according to India’s central bank in March 2016, over 86% of the value of all rupee notes in circulation in India was held in those 500 and 1,000 rupee notes. The recall – if everyone comes forward with their notes – will bring in twenty billion banknotes, which will be quite a security destruction challenge. In order not to tip off anyone who might take advantage by moving their cash around, even the banks weren’t warned in advance, and they have struggled to supply enough cash in other, smaller denominations, producing enormous queues at branches around the country. There is a public education requirement: at the moment, 90% of India’s transactions are in cash, and many – most – Indians do not have a bank account. Mr Modi has called on his people to embrace digital payments, but many doubt that the systems could cope – or that you can force people to trust something of which they know so little.

So the next time that someone suggests that insisting on asking questions about, for instance, source of funds is too intrusive and a step too far, I shall simply raise an eyebrow and ask whether the UK government should simply declare £10 and £20 notes no longer to be legal tender after lunch.

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